Keep current Heloc or do a Cash Out Refi

[Brian G.]

We currently have a $125k Heloc with Pen Fed interest only payments at Prime + 1% secured by a 2-unit rental property. Initially we got the Heloc setup with the intention to do remote BRRRR or flips, however my wife never got comfortable with either strategy so instead we used the Heloc to purchase a STR cabin near the Smoky Mountains. Our plan is to buy more cabins. Since Helocs are generally utilized as a short term financing tool, I'm considering doing a cash out refi and paying off the Heloc if we can lock in a great rate. Going forward we would use the cash out refi proceeds and save up additional cash for the next purchase. Alternatively, we could save up cash and with our current available Heloc funds make the next purchase then pay down the Heloc over time, use the Heloc to buy...rinse and repeat. We do plan to continue to expand our STR business. Should we ditch the Heloc and lock in a 30 year cash out fixed rate refi? Thinking it might be wise as I don't see us purchasing anything other than STRs over the next 5 years or more. Helocs are variable rates and technically can be frozen or even called at the whim of the bank, however it's hard to imagine interest rates rising much any time soon since our country owes $20T+. Seems we are using a short term tool (Heloc) for a longterm strategy (STRs). Thoughts?

[Whitney Hutten]

@Brian G. I get it. It all depends if you want to build your wealth leveraging your own money or someone else's like the bank... And when using HELOC funds, I would use if for BRRRR projects where you have a reasonable chance of paying it down quicker.